Brazil Accuses EU Of Instigating "Trade War", Threatens WTO Complaint

Brazil's agriculture minister is accusing the European Union of trying to start a trade war with South America's largest economy after it threatened to cut off imports of domestic Brazilian chicken following a food-contamination scandal Bloomberg reported.

With the European Commission set to discuss restrictions on imports from BRF, Brazil's largest packaged-food producer and leading poultry supplier, Blairo Maggi is apparently turning up the rhetoric in hopes of averting a potentially devastating export ban.

According to Reuters, the EU is planning to ban imports from nine BRF poultry plants and may also revoke import credentials for other chicken plants in the country.

If the EC does decide to ban imports from BRF, the company - Brazil's largest packaged-food producer - would likely need to lay off the nearly 15,000 workers.

Maggi said it's more likely than not that the bloc will decide to move ahead with the sanctions. When it does, Maggi told Reuters Brazil would file a complaint with the WTO organization (a transparent effort to leverage anxieties about a global trade war to its advantage).

Despite Maggi's threats, it's hard to blame the EU for considering the ban. Brazil's federal police last month discovered that BRF - working in concert with accredited laboratories - had falsified results of tests on meat samples for salmonella.

An arrest warrant has been issued for former Chief Executive Officer Pedro Faria as part of the investigation - known by the codename "Operation Trapaca (which means cheating in Portuguese).

Brazilian police have been cooperating with EU authorities, and have suspended BRF from shipping goods to Europe temporarily.

"It became evident after Trapaca that BRF had problems," Maggi said. But he added that Europe is also raising unjustified sanitary barriers for Brazilian producers to reduce their market access. "Brazil will have no alternative but to make a complaint against the EU via the WTO."

BRF stock is down 43% so far this year thanks to the fallout from the scandal. It has about 88,000 employees in Brazil, according to a 2017 report.

As Bloomberg explains, Brazil exports two kinds of chicken to Europe: salted and non-salted.

The first category accounts for the bulk of exports, for which Brazil has an annual quota of 170,807 metric tons, and which are tested for 2,600 strains of salmonella, the agriculture ministry said.